ACIT, Cir-32, Kolkata, Kolkata V. Vibha Kejriwal, Kolkata

ITA 1877/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0488 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Unexplained expenditure; Accommodation entries
• Section: 69C; 68; 69

Judgement Text

1 ITA NO. 1877/KOL/2017 VIBHA KEJRIWAL, AY 2014-15 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1877/KOL/2017 ASSESSMENT YEAR: 2014-15 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-32, KOLKATA. VS. VIBHA KEJRIWAL (PAN: AFXPK5068E) APPELLANT RESPONDENT DATE OF HEARING 06.09.2018 DATE OF PRONOUNCEMENT 14.09.2018 FOR THE APPELLANT SHRI ROBIN CHOUDHURY, ADDL. CIT, SR. DR FOR THE RESPONDENT SHRI MANISH TIWARI, AR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A)-9, KOLKATA DATED 31.05.2017 FOR AY 2014-15. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS.74,46,250/- ON ACCOU NT OF UNEXPLAINED CASH CREDIT AND ALLOW THE CLAIM U/S. 10(38) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT). 3. AT THE OUTSET, THE LD. AR BROUGHT TO OUR NOTICE THAT THE ASSESSEE IS THE MOTHER OF KUMARI TANVI KEJRIWAL (DAUGHTER) AND SHRI VIRAJ KEJ RIWAL, (SON). IT WAS POINTED OUT TO US BY THE LD. AR THAT IN BOTH SON AND DAUGHTERS CASE, ADDITIONS WERE MADE BY THE AO FOR THE SAME REASON I.E. ADDITION OF LTCG ON SALE OF SAME S CRIPS OF RS.74,46,250/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT WHICH HAS BEEN DELET ED BY THE LD. CIT(A) AND THE LD. CIT(A) WAS PLEASED TO ALLOW THE CLAIM OF ASSESSEE U/S. 10( 38) OF THE ACT. THIS ACTION OF LD. CIT(A) 2 ITA NO. 1877/KOL/2017 VIBHA KEJRIWAL, AY 2014-15 HAS BEEN LATER UPHELD BY THIS TRIBUNAL. THEREFORE, ACCORDING TO LD. AR, ON SAME REASONS AND FACTS, THE ORDER OF THE LD. CIT(A) NEEDS TO BE UPHELD. ON THE OTHER HAND, THE LD. DR COULD NOT CONTROVERT THESE FACTS. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT IN ASSESSEES SON AND DAUGHTER S CASE ALSO SIMILAR ADDITIONS WERE MADE BY AO WHICH HAS BEEN DELETED BY THE LD. CIT(A) AND THAT ORDER HAS BEEN CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 20.12.2017 TAKING INT O CONSIDERATION THE FACT THAT THE ASSESSEE GOT LONG TERM CAPITAL GAIN ON SALE OF SCRIPS OF M/S . KAILASH AUTO FINANCE LTD. (HEREINAFTER REFERRED TO AS M/S. KAFL). WE NOTE THAT DURING T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2014-15, THE ASSESSEE SOLD 2,00,000 EQUITY SHARES OF KAILASH AUTO FINANCE LTD. LISTED ON THE BOMBAY STOCK EXCHANGE (BSE). TH E ORIGINAL INVESTMENT WAS MADE BY THE ASSESSEE IN 2,00,000 SHARES OF M/S CAREFUL PROJ ECTS ADVISORY LIMITED ON 27.02.2012 WHICH WAS SUBSEQUENTLY MERGED WITH M/S KAILASH AUTO FINANCE LIMITED VIDE MERGER ORDER OF THE HONBLE ALLAHABAD HIGH COURT DATED 21.05.201 3. THUS THE SHARES WERE HELD BY THE APPELLANT FOR A PERIOD OF OVER 18 MONTHS BEFORE EFF ECTING THE SALE. THE SALE OF THE ABOVE SHARES TOOK PLACE ON THE FULLY AUTOMATED SCREEN BAS ED ONLINE TRADING SYSTEM OF SEBI RECOGNIZED BOMBAY STOCK EXCHANGE ON WHICH STT WAS P AID ON EACH SALE AND THEREFORE, THE ASSESSEE CLAIMED THAT THE CAPITAL GAINS OF RS.74,34 ,775/- ON SALE OF 2,00,000 EQUITY SHARES OF M/S KAILASH AUTO FINANCE LTD. WHICH WAS EXEMPT U /S. 10(38) OF THE ACT. THE CLAIM OF ASSESSEE FOR LTCG ON SALE OF SCRIPS OF M/S. KAFL WA S NOT ALLOWED BY AO WHICH WAS CHALLENGED BY ASSESSEE BEFORE LD. CIT(A) WHO WAS PL EASED TO ALLOW THE CLAIM OF ASSESSEE. WE NOTE THAT A SIMILAR ISSUE AROSE IN THE CASE OF M AHENDRA KUMAR BAID ON LTCG IN RESPECT OF SALE VERY SAME SCRIPS OF M/S. KAFL WHEREIN THE T RIBUNAL HELD IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER FOR VERY SAME AY 2014-15: 6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF TH E LD AR THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WITHOUT B RINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF S PECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA) FOR THIS PROPOS ITION. THE VARIOUS FACETS OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE A SSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON THE EVIDENCES AVAILA BLE ON RECORD, ARE NOT REITERATED FOR THE 3 ITA NO. 1877/KOL/2017 VIBHA KEJRIWAL, AY 2014-15 SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOU S CASE LAWS RELIED UPON BY THE LD AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FI ND THAT THE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED BY THE ORDER OF HONBLE HIGH COURT. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME APPROVED BY THE HONBLE HIGH COURT IN MAY 2013 MERELY BASED ON A STATEMENT GIVEN BY A TH IRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS EXAMINATION. MOROEVER, IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BROKING LTD NAME IS NEITHER MEN TIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DEALT WITH SUSPICIOUS TRANSACTION S NOR THEY HAD BEEN THE BENEFICIARIES OF THE TRANSACTIONS OF SHARES OF KAFL. HENCE WE HOLD THA T THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UN WARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINI ON, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE AR GUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SEBIS INTERIM ORDER SUPRA. WE FIND THAT THE SEBIS ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM AS DIRECT EVIDENCE AG AINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE AND/OR THE NAME OF ASHIKA STOCK BRO KING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHARES OF KAFL AS A BENEFICIARY TO THE ALLEGED ACCOMMODATION ENTRIES PROVIDED BY THE RELATED ENTITIES / PROMOTERS / BROKERS / ENTRY OPER ATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE WAY BACK ON 20. 12.2011 AND PURSUANT TO MERGER OF CPAL WITH KAFL, THE ASSESSEE WAS ALLOTTED EQUAL NUM BER OF SHARES IN KAFL, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MOST OPPORTUNE MO MENT BY MAKING GOOD PROFITS IN RODER TO HAVE A GOOD RETURN ON HIS INVESTMENT. WE FIND THA T THE ASSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRIMARY ALLOTTEES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBIS ORDER. WE FIND THAT TH E SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TRADING IN SHARES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTDS NAME IS NOT REFLECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRI CE RIGGING OF KAFL SHARES FAILS. WE ALSO FIND THAT EVEN THE SEBIS ORDER HEAVILY RELIED UPO N BY THE LD AO CLEARLY STATES THAT THE COMPANY KAFL HAD PERFORMED VERY WELL DURING THE YEA R UNDER APPEAL AND THE P/E RATIO HAD INCREASED SUBSTANTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVIDENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE. T HE ENQUIRY BY THE INVESTIGATION WING AND/OR THE STATEMENTS OF SEVERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONNECTION WITH THE ALLEGED BOGUS TRANSACTIONS IN THE SHARES OF KAFL AL SO DID NOT IMPLICATE THE ASSESSEE AND/OR HIS BROKER. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BAN K ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARE S RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATE D. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFOR E THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10( 38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH CO URT RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTA NT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 1 RAISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 7. THE NEXT COMMON ISSUE IN THE APPEALS IS AGAINST THE ADDITION OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT ON THE GROUND THAT T HE ASSESSEE MUST HAVE INCURRED COMMISSION EXPENSES @ 5% OF THE LTCG. THE LD. AR SUBMITTED THA T THERE IS NO EVIDENCE OF INCURRING SUCH EXPENDITURE. IT WAS PLEADED THAT NO ADDITION U/S 69 C OF THE ACT COULD BE MADE UNLESS IT IS 4 ITA NO. 1877/KOL/2017 VIBHA KEJRIWAL, AY 2014-15 FOUND THAT THE ASSESSEE INCURRED SOME EXPENDITURE W HICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE FAILED TO SUBSTANTIATE TH E SOURCE OF SUCH EXPENDITURE. 7.1. WE HAVE ALREADY HELD THAT THE TRANSACTIONS REL ATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE LD AO. CONSEQUENTLY THE ADDITION U/S 69C OF THE ACT IS HEREBY DIRECTED TO BE DELETED. WE ACCORDING LY HOLD THAT THE REFRAMED QUESTION NO. 2 RAISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND I N FAVOUR OF THE ASSESSEE. SINCE THE ISSUE IS SAME AND RELATE TO SCRIPS OF M/S . KAFL, AND AY IS ALSO SAME, WE RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL IN MAH ENDRA KUMAR BAID, SUPRA, UPHOLD THE ORDER OF LD. CIT(A). THEREFORE, THE APPEAL OF REVE NUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14TH SEP TEMBER, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14TH SEPTEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ACIT, CIRCLE-32, KOLKATA. 2 RESPONDENT SMT. VIBHA KEJRIWAL, 2A, BASIL HEIGH TS, 3C, LOUDON STREET, KOLKATA-700 017. 3. 4. 5. CIT(A)-9, KOLKATA. CIT, KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY